I wrote this book with the goal of helping others.  The book was almost an obsession. I had intended it be sold in stores. This book consumed seven years of my life.

But then I met a lot of good people on the Internet. I became friends with all of you. And finally, instead of making a few dollars for myself, I have decided that I would rather help my friends. Almost every person you know will buy a car sooner or later. And so probably will you. This book is designed to save you a lot of money. If it does, all I ask, is that you take a little of what you have saved and use it to bring a little happiness into someone else's life.

ABOUT THE BADDTEDDY BUYERS GUIDE FOR NEW AND USED CARS

This book is a step by step process designed to assist you in obtaining a bottom-line deal on every purchase of a new or used vehicle.

NO HAGGLING

This book does not teach the art of haggling or theory of negotiations. Instead, it teaches you how to find the dealer's bottom-line. If you know the bottom-line, there is little or no need to negotiate.

IT'S AS EASY AS FILL IN THE BLANK

This book is divided into sections. Within each section are subject areas to explain a specific aspect of the purchase process. At the end of each section is a worksheet or purchase offer. Fill in the blanks according to the instructions and when you finish this book the result will be a written purchase offer that you can hand to the salesperson and say with confidence, "This is my final offer."

TRADE-IN

This section will teach you how to receive more money for your trade-in by appraising your trade-in, and evaluating your trade equity. It will also show how to receive refunds on credit life insurance and extended warranties on the vehicle you are trading-in or selling.

USED CARS

This section teaches you how to find the dealers cost on used cars, figure trade allowances, and how to find the lowest price at which a dealer is willing to sell. Includes the "Used Car Purchase Offer."

NEW CARS

This section will help you find the dealers cost on new cars, factory options, dealer extras, plus helpful information on rebates, trade allowances and sales tax. Take the completed "New Car Purchase Offer Form" to the dealer and let it do the negotiating for you.

FINANCE

This section explains dealer doc fees, warranties, credit life insurance, types of loans and interest rates. Includes the "Finance Purchase Offer".

CREDIT

This section includes advice on improving credit ratings, lowering interest rates and includes a "Credit Application Form".

PHONE NUMBERS

This section lists important phone numbers that can help you "before" and "after" the purchase.

BEWARE OF FALSE REFUND GUARANTEES

Very few dealers will allow you to return a vehicle for a full cash refund. Some offer a refund "credit" or allow you to trade-in the vehicle, but these "may" actually end up costing you even more money if you return the vehicle. The dealer already made a profit on the first vehicle and now they get a chance to make an additional profit by "selling" you a replacement vehicle.

DON'T BELIEVE EVERYTHING YOU SEE OR HEAR IN ADVERTISEMENTS

Dealer advertisements are full of small print and the dealer may leave out information accidentally or intentionally. Often the "low payments" do not include the sales tax, destination, tags, title, doc fees, appearance package, etc. Additionally, they may be using rebates you do not qualify for such as; "First Time Buyer", "Recent College Graduate", "Military", "Factory Employee", etc... Even if it says "No Money Down", it may be a lease in which case you may be required to pay the first month, the last month, a security deposit, taxes, capitalized cost reduction, acquisition fees, etc...

DON'T WAIT FOR SALES

Sales are a gimmick. Dealer advertisements during a sale proclaim that they are now offering the lowest "Blow-Out" prices in the whole world. Don't believe it! Normally during a sale the dealer's cost remains the same as any other time. Since the dealer's cost doesn't change, the lowest price at which the dealer can afford to sell at does not change. If you take the time to research the dealers cost, you should be able to get the best deal at any time, without waiting for a "sale".

A GOOD TIME TO BUY

However, it should be noted that salespeople and sales managers, hoping for a "bigger month end bonus check", may be more eager to make you a slightly better deal during the last five days of the month. The dealer's cost doesn't go down, but the amount of time that it takes a "bonus-minded" manager to agree to the deal may be shorter.

WHERE TO BUY

Today's market offers many choices such as the traditional new and used car dealers, no-negotiate one price dealers, brokers, credit unions, club discount membership programs, for sale by individuals, and you can even buy via the Internet. All of them offering promises of the best no hassle deal. Who should you trust? The answer is simple, trust no one. Instead, fill out the purchase offer included in this book to find the bottom-line price. No matter who the seller is: If they are willing to sell at or below the bottom line price on the purchase offer, buy the car. If they won't, go somewhere else.

Before looking at new cars it is important to decide how much you can afford to spend.

BEGIN BY FIGURING YOUR OWN PERSONAL HOME BUDGET

Sit down at home and figure your monthly bills and expenditures. Allow for emergencies, changes in jobs, medical, entertainment, rent/mortgage, utilities, loans, credit cards, increases in family size, food, laundry, retirement, etc... Then allow for the unexpected and a margin for error.

Take into consideration possible increases in car insurance premiums and fuel usage in addition to the monthly car payments.

The remainder is the "maximum amount" that you can reasonably afford to spend on a new car. Be conservative. Make allowances for future emergencies and possible changes in income. Decide on a maximum amount you are willing to spend. Don't let the salesperson, your emotions, or the excitement of a new car guide you. Decide on this figure at home, before you go into negotiations, and stick to it.

When deciding how much you can spend on a car, allow for sales tax, license plate fees, down payment, trade-in equity or inequity, rebates and possible discounts.

PAYMENT GUIDELINE

Use the following payment guideline as a reference tool to decide on a price range that is within your budget. Payments are approximate and due to fluctuations in interest rates actual payments may be slightly higher or lower. You will figure your actual monthly payments in the chapters that follow.

Most banks charge higher interest rates for longer term loans. Extending the term of the loan may cost hundreds or even thousands of dollars extra. Save money by taking a shorter term loan.

Amount          36 mo             48 mo                 60 mo
Financed         8% APR          9% APR         10% APR

$ 5,000         $155                $125                  $105

$10,000        $315                $250                  $210

$15,000        $470                $375                  $320

$20,000        $625                $510                  $425

$25,000        $785                $635                   $530

$30,000        $940                $760                   $640

Most consumers pay too much when buying a car because they do not "completely" understand the buying process and how to avoid dealer money traps.

HOW MUCH OF A DISCOUNT IS ENOUGH?

Most consumers realize that paying full window sticker price for a new car would be a big mistake. Unfortunately, they do not know the dealers cost. Therefore, their buying decision is often based on guessing at how much money they should be able to negotiate off the sticker price of a car.

"EVERY CUSTOMER" DEMANDS A BIG DISCOUNT

Car dealers know that "every" customer is expecting to negotiate. They know that most will not buy without "a big discount." So the dealer using psychology, starts out at a higher price so that consumers can negotiate a big discount and go home thinking that they have "outsmarted" the dealer and made an excellent buy.

"A GOOD DEAL IS A STATE OF MIND"

Although there are some honest car dealers, other less-than-honest dealers operate under the assumption that for the customer "a good deal is a state of mind". And that if they can make you "believe" you have negotiated an extra good deal, they can sell you a car. As a result, car sales has become one of the biggest con games ever.

GET AN EDUCATION IN CAR BUYING

The following story is designed to educate you about the car buying process. First you will learn how a car dealer can allow you several thousand dollars in "negotiated" discounts and still overcharge you.

.......ONCE UPON A TIME.......

Twin brothers, Little Johnny and BaddTeddy, bought identical new cars. They worked at the same job and they both had good credit. They had identical trade-ins of equal value. Everything was identical.

LITTLE JOHNNY

Little Johnny (John) was an average new car buyer and used the "haggling" method to negotiate what he considered a good deal (state of mind). As a result of John's hard work and stubbornness he received several thousand dollars worth of "negotiated" savings. (Little Johnny paid to much!)

BADD TEDDY

Badd Teddy (Teddy) on the other hand knew what he was doing. He researched the dealers cost, interest rates, insurance and had his trade-in appraised elsewhere before going in to negotiate. Teddy made an "informed decision" and saved far more money than John.

THE REAL DIFFERENCE

Even though John and Teddy bought identical cars, Teddy paid $7,000 less for his car. Don't believe it? Dear John, Read and learn!!!

John wanted the dealer to install an AM/FM/Cassette Radio in his new car.

The dealer inform John the price was $599.

John said this was too much.

After 30 minutes of dickering John and the salesman agreed on $400. The salesman said that they could sign the contracts that day and John would need to bring the car back the following week to have the radio installed.

Secretly, the salesman planned to wait until "after the contracts were signed" so he could install a cheap generic brand radio.

John Paid $400 and was very unhappy with the quality of his new radio.

Teddy wanted the dealer to install an AM/FM/Cassette radio in his new car.

Teddy called several companies that install radios. He asked specific questions about quality and price.

Teddy specified "in writing" that he wanted a BaddTunes Classic Jam Gold Series AM/FM/Cassette Radio with Digital Tuning and Clock, plus four 120 Watt Boomerang Subatomic Super Speakers.

Teddy verified the dealers cost in advance ($350) plus allowed the dealer a $25 profit for having the work done "before" Teddy took delivery of his new car.

Teddy paid $375 and completely enjoyed listening to BaddTeddy Wavs and Jams on his new stereo system.

JOHN                                                           TEDDY

11,800                                                             9,300
+ 400 Substandard Generic Radio                + 375 Quality Stereo System
12,200                                                             9,675

John wanted the dealer to install a sun roof.

The salesman told John the sun roof was $399.

John spent another hour haggling over price with the salesman and they finally agreed that for $300 the dealer would get the sun roof installed in John's new car the following week.

A week later the dealer installed a small, generic brand, non-removable sun roof in John's car. John was unhappy!

Teddy wanted the dealer to install a sun roof.

Teddy called several companies that specialize in installing sun roofs and asked specific questions about quality, size and price.

Teddy specified "in writing" to the dealer that he wanted them to have Sporty Tops install a large, removable, sun roof with dark tint.

Teddy paid the dealer's cost of $200, plus $25 dealer profit, for having the work done "before" Teddy took delivery.

JOHN                                                     TEDDY

12,200                                                      9, 675
+ 300 Small Generic Sun roof                   + 25 Large Removable Sun roof
12,500                                                       9,900

The Finance Manager suggested that John should protect his rather sizable investment.

He said that for less than the cost of a cup of coffee, 40 cents a day, that John could buy an Extended New car Warranty.

John said ok.

The Finance Manager conveniently forgot to inform John of the total cost of the warranty. There were nearly 2,000 days on the contract, at 40 cents a day.

Total cost of the warranty was $800.

Teddy asked the Finance Manager to show him the best Bumper to Bumper Extended Warranty available. He specified a warranty with "no deductibles"

Teddy then insisted on seeing the dealers cost book for the warranty. The dealers cost for the best warranty was $500.

Teddy knew the Finance Manager was a commissioned salesperson so he agreed to pay $100 over the dealers cost for the warranty.

Teddy bought the "best" warranty for $600.

JOHN                                                             TEDDY

12,000                                                                8,900
+ 800 Warranty (deductible)                               600 Best Warranty (No Deductible)
12,800 9,500

The Finance Manager told John that he could get John a Preferred Rate on Financing.

This of course sounded good to John who worried about every penny.

What the Finance Manager forgot to tell John was that a "Preferred Rate" was the interest rate the dealer preferred to charge him.

The Finance Manager secretly plans to charge John a high interest rate of 10.5% for 66 long months.

Teddy called all the local banks to find the lowest interest rate, "before" he went to the dealer. He turned down dealer financing because he was able to receive a lower interest rate from a local bank.

Teddy's rate was lower for three reasons
1. A smaller amount financed
2. A shorter term loan
3. No dealer profit on the financing

Teddy's interest rate was only 7% for a shorter 48 month period.

EPILOGUE

Two years later John and Teddy crashed into each other. John and Teddy were ok, but both Moonbeams were totaled. The insurance companies decided that the current market value of each car was $5000 and they sent a check to each of John and Teddy's banks.

The remaining balance on John's loan The remaining balance on Teddy's loan
after 24 payments was $9,656. after 24 payments was $5,588.

The insurance company sent John's The insurance company sent Eddie's
bank a check for $5,000. bank a check for $5,000.

$9,656 Balance Due Lender $ 5,588 Balance Due Lender
- 5,000 Insurance Check - 5,000 Insurance Check
$4,656 John owes lender 588 Teddy owes lender

REFUNDS

John owed $4,656 on a car that he no                  Teddy remembers reading that extended
longer owned.                                                        warranties and declining term life
                                                                               insurance policies are refundable on a
He was unaware that Credit Life insurance         a prorated basis.
policies and extended warranties were
partially refundable.                                                   Teddy's refunds totaled $600.

$588 Balance Due Lender
- 600 Refund
$4,656 John's Owes Lender                         $ 12 Eddie is Ahead

15

WHAT HAPPENED TO JOHN AND TEDDY?

John could not find a bank willing to loan           Teddy had no debt, good credit and $12
him enough money to buy a new car and            in his pocket.
pay-off the $4,656 loan on his old car.
                                                                               Teddy bought a new Moonbeam 2100 XTC
John had no car.                                                     and drives off into the sunset.

Since John's job required a car, John lost

his job. After John lost his job, he couldn't

pay his mortgage.  John lost his house.

John is forced to file bankruptcy, and
now the only thing John has to his name
is BAD CREDIT!

DO YOU WANT TO BE A JOHN OR TEDDY?

Everything in the "John and Teddy Story" is based on real car deals. John is an average consumer (some get much worse deals). Teddy is among the few consumers that actually gets a "bottom line" deal based on an "informed decision".

16

TRADE-IN: WHAT IS MY CAR WORTH

Many dealers make huge profits by "stealing the trade". These dealers try tricks such as false appraisal values, exaggerating the cost to repair damages, etc... to get you to accept less than your trade's true (wholesale) value. They know your car is worth more money. They are trying to get you to accept less so that they can make larger profits. Hence, the term "stealing the trade".

SELL YOUR VEHICLE AT RETAIL

Consider selling your vehicle yourself. If you trade the vehicle in, most dealers will only allow you wholesale value. However, if you sell the vehicle yourself you can ask retail. This can mean several hundred or possibly thousands of additional dollars in your pocket.

Have the vehicle thoroughly cleaned, washed and waxed, get the motor cleaned, check and fill fluids, etc... Clean vehicles attract buyers while dirty vehicles scare potential buyers away. If the vehicle is worth more than $1000 take it to a professional detail shop (Yellow Pages). Complete detailing costs less than $100 but can increase the retail value by several hundred dollars.

Never trade in a car without first calling your lender to verify the loan balance (if any). Unscrupulous dealers can steal hundreds, if not thousands, of dollars of your money by using a false loan payoff balance. This can done by several methods.

One way is telling you that your loan payoff is higher than it really is (dealer pockets the difference of up to several thousand dollars of your money) . Another way to take your money is for the dealer to confuse the buyer into believing that the payoff is same as the total of the remaining payments (The actual payoff may be much lower, because the payments include interest that you are not required to pay if you payoff the loan early). The easiest way is to get you to sign a blank payoff authorization form (which he later fills in with whatever numbers he wants).

There are two very easy things you can do to avoid getting ripped off. First, call the lender and verify the exact balance owed for the date that you wish to trade the car in. The second is to read the "payoff authorization form" and verify the payoff is correct. Never sign a blank form.

If you do trade a vehicle in at a dealership, you should be aware that you are entitled to full wholesale value. Wholesale is the market standard and the top dollar a dealer would pay for your car if he bought it at an auction or from another dealer. If you come prepared and show the dealer that you know the wholesale value of your trade-in, the dealer will realize you can't be bluffed and may decide not to waste time playing games.

Although many dealers will try offering less (negotiating), if you are firm and patient, most dealers will eventually give in. Dealers will full wholesale to an educated buyer because the dealer can still make a profit by selling your car at retail.

17

Be smart! Get an appraisal of your own. Start by calling used car managers at other dealers. Explain that you are not buying a vehicle at their dealership, but that you are willing to pay them $15 to $20 for an honest appraisal of your trade-in based on wholesale value. Also, ask them what you should ask for if you sell the vehicle yourself (retail).

Appraisals should be based on Blue Book, NADA (Blue Book), and local auction reports (ask to see the dealers copy) with consideration to vehicle condition and mileage. The Black Book "Official Used Car Guide" is published on a weekly basis by National Auto Research. The wholesale (dealer) and retail (consumer) versions of the NADA "Official Used Car Guide" are published quarterly by the National Auto Dealers Association. When using this book refer only to the wholesale (dealer) version. Do not use; red book, green book, loan value, insurance values, etc... These are intended for other purposes and do not accurately reflect what a dealer is willing to pay.

Blue Book and NADA are available at many libraries (reference section). If your library does not have these books, ask the librarian to order them. Additionally most bank loan officers, credit unions, loan companies and insurance companies use Blue Book and NADA during the course of their business. Give them a call, most will offer to help, in hopes of earning your business.

When your car is appraised it should fall into one of several categories. Categories range from worst condition (lowest value) to near perfect condition (highest value). Dealers decide which category that your vehicle falls based on mileage, appearance and running condition. The dealer then uses the vehicle type, model, category and year to look up the average wholesale value for your vehicle. The dealer may also take into consideration allowances or deductions based on options, lack of options and excess mileage.

If your trade-in has equipment that is not standard for that make and model, the dealer makes allowances for "adds". Adds are amounts that are added to the book value for equipment that is not standard factory equipment for the make and model you are trading in. The biggest adds are normally for "factory" air conditioning, automatic transmission and engine size upgrades. Smaller adds are also listed for power windows, power locks, factory sunroofs, T-tops, fancy wheels, etc... Ask the used car manager doing the appraisal to show you the value of each add.

If your trade exceeds an average of 15,000 miles for each year in service, it does not necessarily fall into a lower category. Instead, the dealer may make a smaller deduction of value based on number of excessive miles and category of car. If the dealer says you have excessive miles, have him show you the book he is using and the dollar amount of the deduction.

18

If you purchased an Extended Warranty and it has not yet expired, you may be entitled to a partial refund. Extended Warranty refunds are not automatic when you total or sell your car. To receive a refund you must go to the dealer that sold you the car and ask for it.

Refunds may be requested at any time. You do not "need a reason". You may decide that the warranty is not worth the cost and demand a prorated refund.

Refunds are normally prorated based on time and mileage. They are not normally based on whether or not the warranty was actually used.

If you borrowed the money to purchase the warranty, most likely the refund will be sent to the bank to reduce the loan balance and interest charges.

Do not cancel a warranty if you may need it in the future.

"WARRANTY & CREDIT LIFE REFUNDS"

If you purchased a Declining Term Life Insurance Policy from an insurance agent or Credit Life/Disability Insurance from the dealer or the lender, and the loan has not yet expired, you are normally entitled to a refund. Refunds are usually prorated by time over the life of the loan.

Credit Life/Disability Insurance refunds are not always automatic if you trade or total your car. You may cancel Credit Life/Disability Insurance at anytime. You do not need a reason.

No matter what the reason, you must contact the dealer or lender (If you obtained your own financing, go to the lender) and request a refund.

Since Credit Life Insurance is designed to protect a loan and the money to buy the insurance was included in the loan, most loan refunds will be paid directly to the lender and used to reduce your loan balance.

19

TRADE APPRAISAL WORKSHEET

"INSTRUCTIONS"

1. Enter the wholesale value of your trade-in from appraisal including the wholesale cost of
any necessary repairs. (Retail Value if selling the vehicle yourself)

If you feel more comfortable negotiating, than making a take it or leave it offer, you can try
starting negotiations asking for a higher trade-in price, but never agree to sell/trade-in your
vehicle for less than its' appraised wholesale value.

2. Enter any expected refund amount from extended warranties.

3. Add lines 1 and 2.

4. Enter any expected refund amount from credit life policies.

5. Add lines 3 and 4. The result is the cash value of your trade.

6. Enter loan balance or enter (0) if no loan.
If there is an existing loan balance still due, contact the lender. Ask for the current loan
balance. Ask how long this balance is good for and the daily interest charge (per diem).

7. Subtract line 6 from line 5.

If the result on line 7 is a positive number, this is your "trade equity".
Trade Equity can be used just like cash as a down payment.

If the result on line 7 is a negative number, you owe more than the car is worth.
You must either pay this off in cash or add it to the amount to finance on your new car.

 20

TRADE EVALUATION WORKSHEET

1. + _______ Trade Value based on appraisal by Used Car Manager, NADA, Black Book.
                      If selling the vehicle yourself enter the retail value
_______________________________________________________________________

2. + _______ Extended Warranty Refund (if any)
3. = (            )
_______________________________________________________________________

4. + _______ Credit Life\Disability Refund (if any)
5. = (           ) Cash Value of Trade-in
________________________________________________________________________

Do the addition above. The result is the cash value of your trade
_______________________________________________________________________

6. - _______ Current Loan Balance Date Verified ______ Good Until ____________
7. = (           ) Equity Per Diem _________ Name of Lender ________
                     Phone ___________ Months Remaining ______
________________________________________________________________________

Subtract the Existing Loan Value. The result is "trade equity"
________________________________________________________________________

If the result is a positive number, this is your trade equity and can be used just like cash to
reduce the cost of your new vehicle.
________________________________________________________________________

If the result is a negative number, you owe more than the car than is worth (Negative Trade
Equity). This amount will be added to your new car loan unless you provide enough cash to
cover the difference.
________________________________________________________________________

USED CARS - "SELECTION AND APPRAISAL"

USED CARS ARE SOMEONE ELSE'S TRADE-INS

The first step in determining a used car's value is understanding where the vehicle came from and how much the dealer paid for it. Since most used cars were traded into the dealership by someone else it is very important to understand how the trade-in system works. Therefore, before beginning to read about used cars take a few minutes and read the preceding section about trade-ins.

VEHICLE SELECTION

Select a vehicle that meets your personal, business and financial needs the same as if you were shopping for a new car. This includes verifying the cost of insurance before you buy! Please see vehicle selection in the New Car Section for details.

AVOID RENTAL CARS

Have you ever rented a car? If so, you have you probably realize that many people do not take good care of rental cars. Out of the large number of people that drive them there are bound to be a few hot-rodders. They make fast starts with the tires throwing up clouds of rubber, drive at excessive speeds, spill coffee on the seats, leave cigarette burns in the carpet and cause scratches, dents and dings. These cars get cleaned up before auction but they may still have excessive mechanical wear and tear. Therefore they should be avoided.

HOW TO TELL IF IT'S A RENTAL

Look for rental car company stickers (or sticky spots where the stickers used to be) on the visors, in the trunk, inside the door jam, under the hood and in the glove box. Ask the dealer to show you the title or registration from the previous owner. Don't take the dealer's word for it, ask them to show you the title. If the dealer doesn't have these items the vehicle may have come from a rental company, auction, etc... If it was a rental, don't buy it.

CALL THE PREVIOUS OWNER

If the title shows it was owned by an individual, call the previous owner and ask lots of questions about maintenance, mechanical problems, repairs, mileage (in case odometer has been rolled back), etc... One phone could possibly save you hundreds of dollars in repair bills on a lemon.

AVOID HIGH MILEAGE VEHICLES

Avoid vehicles that have high mileage. Even if the vehicle looks and runs good, every mile driven puts wear and tear on the vehicle and uses up the vehicles remaining life expectancy. It's important to consider how may miles will the vehicle have on it before the loan is paid off or you trade it in?

VERIFY IF THERE HAVE BEEN ANY RECALLS

Call the Auto Safety Hotline to verify if there have been any recalls. 1(800)424-9393

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TAKE AN OVERNIGHT TEST DRIVE

Ask to take the vehicle for an over night test drive. Many dealers will agree to this as long as you have full coverage insurance and a valid driver's license.

BEWARE OF CARS THAT LOOK "TOO GOOD"

Beware of freshly repainted vehicles. Why did it need repainting? Was it wrecked? Many repaint jobs are done very cheaply. If the rust is not completely removed it may come through the new paint within a few months. Ask if there is a transferable warranty on any repairs or paint jobs, etc...

MECHANICAL CHECKOUT

Take the vehicle to a good qualified mechanic for an inspection. Spending $25 to $50 to have the vehicle inspected could help you avoid paying to repair a lemon. The inspection should include an electronic check of the motor, emissions testing, brake inspection, fluids color inspection and a road test. The road test should be for several miles because some problems are not immediately apparent and only show up when the engine is hot. If your state or county requires any type of emissions control testing make sure to have the emissions inspection done before you buy. Emission control problems can very expensive to repair.

USED VEHICLE APPRAISAL

If you are considering buying a "used" vehicle, you should have it appraised in the same manner you would have your trade-in appraised. (See the section on Trade-ins). Take the vehicle to the used car manager that appraised your trade-in and offer to pay the Used Car Manager ($15 - $20) to check out and appraise this vehicle. If you have no trade, go to any dealer except where you plan to buy.

Many dealers will point out flaws in the vehicle you are buying in the hopes of selling you one of their cars. This advice works to your benefit. After all you do not want a car with problems.

BLUE BOOK AND NADA

The appraisal should be for wholesale value based on Black Book, NADA, local auction reports and the Used Car Managers Experience. Wholesale value is what most dealers sell used vehicles back and forth to each other for and is the industry standard. This is the "highest amount" that most dealers would have paid for the car. Although they may have paid considerably less by "stealing the trade". For more details on Black Book and NADA values see the section on Trade-ins.

WHOLESALE PRICES AVAILABLE AT

KBB.COM

USED CAR PRICING SERVICES

The following is a list of used car pricing services that will give you the high and low market value of most used cars. Have all information about the car you are calling about written down "before" you call as these services charge an average of $1 to $3 per minute.

1(900)999-2277 Auto Price Line 1(900)258-2886 Consumer Reports "Used Cars"
1(900)786-AUTO Edmund's 1(900)321-ROAD Road and Track Auto Hotline

23

USED CAR PURCHASE OFFER

INSTRUCTIONS

The following instructions are designed to help you fill out the "Used Car Purchase Offer".

1. Fill in the information at the top of "Used Car Purchase Offer" for both vehicles.

2. List repairs that you want the dealer to include in the purchase price. (Never accept oral
promises)

3. Next to purchase, enter the wholesale value (from the appraisal) for the vehicle you intend
to buy. You can try offering less.

4. Next to Trade-in, enter the wholesale value, or "0" if no trade, for the vehicle you want to
trade-in. Note: This refers to the vehicle's wholesale value - Not Trade Equity

5. Find the "Difference in Wholesale Value" by subtracting "Trade-in Value" from "Purchase
Value".

6. Next to "Dealer Profit" enter what you believe to be a small but reasonable dealer profit.
Make allowances for the following dealer costs and of course dealer profit:
Cleanup costs ($100 - $150). Repairs, if any, ($100 - $300). Dealer Profit ($200 - $600).

You can "try" a lower offer, but never pay more because the vehicle may depreciate
instantly, as you drive out of the dealer's lot, by amount you paid in excess of the
vehicle's true market value.

7. Add "Dealer Profit" to the "Difference in Wholesale Value" to find the "Trade Difference".
This is the "cash difference" that you are paying for the car.

8. Sign and date the offer.

THIS IS YOUR FINAL OFFER

This is your final purchase offer. Take it with you to the dealer. Give it to the salesperson and inform him that this is your final purchase offer. When they try to negotiate, they may say "you have made a mistake", that they can't possibly sell that car for such a low price, etc... Stand Firm! Because you have allowed them a small, but reasonable profit, most dealers will eventually take your offer. Make sure that the dealer signs the agreement.

THE FINANCE MANAGER

The salesperson will now turn you over to the finance manager who's job it is to try to increase dealer profit by selling you extended warranties, credit life insurance, financing, etc... Please read the section on "Financing" where you will prepare a separate purchase offer for the finance manager.

24

PEG

Preferred Equipment Groups save you money. Factories save money by "mass producing" nearly identical vehicles (versus every vehicle being custom made) and pass these savings to the customer in PEG's. Because sometimes you can get over $1,000 in options for less than $200 you should carefully read the factory brochure and select the PEG that best suits your needs and budget.

POWER STEERING AND BRAKES

Power steering and power brakes are the most important resale value options. They make driving easier and safer. Buy them!

AIR CONDITIONING

Factory air conditioning is worth the additional cost. It offers to you and your passengers comfort and it makes your vehicle easier to sell a few years from now (try selling a car without air conditioning in Florida in July). A/C has excellent resale value, after 3 or 4 years you can get back approximately 50% of the original cost.

AUTOMATIC TRANSMISSION

An automatic transmission offers easy hassle free driving. Furthermore when you resell this vehicle there may be more potential buyers. Automatic transmissions are expensive, but you get part of the cost back at trade-in time because automatics get higher resale value than standard transmissions.

STANDARD TRANSMISSION

The three primary advantages of a standard transmission (stick shift) are lower cost, slightly better fuel economy and better acceleration. The disadvantages are; it can be a hassle in stop and go traffic, a standard transmission may be harder to sell, and many people cannot drive a stick shift. If there is an emergency, and someone other than yourself needs to drive the vehicle to the hospital, will they able to do so?

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POWER WINDOWS

Power Windows offer convenience and safety. You can roll up the windows without stopping the car in case of sprinklers, changes in weather or unwelcome intruders.

ELECTRIC REAR WINDOW DEFOGGER

If you live in a cold weather state a factory installed electric rear window defogger is an excellent investment. They can remove fog from your windows in just minutes which can save you time and makes driving safer. Factory installed defoggers are usually a much better quality and have fewer problems (wires coming loose, etc...) than after-market (dealer installed) defoggers.

TILT STEERING

Consider tilt steering if more than one person drives your vehicle or if the standard steering wheel is uncomfortable for your body size or physical disabilities.

AUTOMATIC SEATBELTS

Automatic seatbelts are a life saving feature. The difference in having your seatbelt on or your seatbelt off can be a life or death decision. Take a minute an look at your family's seatbelt habits and decide it you need to make it a point to look for a car with automatic seatbelts

AIR BAGS

Air Bags can save your life. In the event of an accident it provides an extra cushion that slows your forward momentum in an accident. Please note that air bags do not replace seat belts. For true safety you should use airbags "and" seatbelts. Look for vehicles that include air bags for the driver and passengers as standard equipment. If the air bags are optional ask yourself "Which is more important; my money or my life?" Some insurance companies offer discounts for cars with air bags.

(ABS) ANTI-LOCK BRAKING SYSTEMS

Anti-lock brakes can save your life too! They help reduce stopping distances which can help prevent accidents. Additionally, more and more new cars are coming equipped with ABS. What happens during an emergency stopping situation when the car in front of you has ABS (short stopping distance) and you don't have ABS (longer stopping distance). Crunch! The possibility of causing an accident becomes very real. ABS could save your life and lower your insurance premiums. Look for it!

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"DEALER INSTALLED EXTRA'S"

New car dealers add options for two primary reasons. Increased sales and higher profit per deal. Some dealers charge reasonable prices for quality equipment. Other dealers, out to make a fast buck, install cheap generic equipment and charge high prices. It is important that you know exactly what you are buying, where to go for warranty service and the dealers cost. You may be able to save money by going directly to the outlet store and paying to have the work done yourself.

FACTORY WARRANTY?

Beware, some after-market products, especially electronics and air conditioners, whether installed by the dealer or local outlet stores may void all or part of your factory warranty. If something goes wrong who will fix it? You may be better off to find a vehicle with factory installed equipment.

APPEARANCE PACKAGES

Appearance Package stickers usually appear in the window next to the MSRP sticker. The sticker does not say what an appearance package consists of. Since dealers charge anywhere from $39 to $799 for these packages, most consumers believe that they are actually receiving some sort of added benefit from the appearance package. However, Appearance Packages consist of mainly one thing... dealer profit. Dealers often apply $20 pinstripes and $10 door edge guards to a vehicle and call it an appearance package. Don't let the dealer profit at your expense. Ask what the package consists of and pay only the dealers cost, which should be listed on the dealers invoice.

DEALER ADD-ON STICKERS

Dealer "add-on" or "bump" stickers are usually located to the right of the MSRP sticker. Dealers add radios, appearance packages, graphics, custom wheels, sunroofs, bedliners, spoilers and ground effects, etc... to make their vehicles more attractive. They also want to increase profits with big mark-ups.

Verify the dealers cost by checking around for similar equipment at outlet stores or car customizers. Also ask to see the cost listed on the dealers invoice. Pay only the dealers cost.

DON'T OVER CUSTOMIZE

Generally, customizing adds little or no value to the vehicle. Money Gone! If you do customize, do it tastefully. What would the average buyer look for in a used car? Graphics, ground effects, custom wheels etc... look good, but they have little resale value. Some types of customizing (exotic paint jobs, etc...) can actually reduce the resale value.

DEALER INSTALLED RADIOS

The dealer mark-up on dealer installed radios may be outrageous. Don't just agree on a price. Agree on a radio. If you don't, the dealer may install a cheap generic radio that sounds terrible. Shop around at local car radio stores and s